Steel firms agree to hold prices

WITH ITS BACK PUSHED TO THE WALL BY INFLATION, GOVT PULLS OUT ALL THE STOPS

The steel industry, which has been raising prices, appears to be bowing to the government's pressure to reduce prices. Secondary steel producers has assured the government that they would hold the prices to help contain inflation.

In a meeting with steel secretary R S Pandey, they agreed to increase the import of hot rolled coils (HRC) by 0.6 million tonnes to 1.6 million tonnes to augment domestic availability of the alloy.

Secondary producers "� these are mini blast furnace units, sponge iron producers, tinplate and cold rolling units, etc -- usually import 1 million tonne of HRC annually under the advance licence system.

These producers have been told to buy 1.6 million tonnes and export an equal quantity of finished steel-products. "They have committed to improve domestic availability. If the supply improves, prices will fall," said Pandey.

However, holding prices may not help in controlling inflation, since prices are already high. The prices of TMT bars, for instance, have jumped 40 per cent since January to Rs 42,000 a tonne.

Steel (including iron) has a weight of 3.64 per cent weight in the wholesale price index. Inflation for the week ended March 15 stood at a 13-month high 6.68 per cent.

The steel ministry has called the primary steel producers tomorrow to discuss the issue of rising prices. The producers are likely to convey that they would hold prices until the new raw material contracts come into effect.

"If the government does not bring down raw material prices, we cannot do anything. We will have to pass on the raw material price increases to the consumer," they said. The new coking coal contracts are likely to be negotiated over the next week and iron ore soon after.